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Alternative remittance systems use of retail outlets

Facts

This case involved a number of overseas remittance services. Common elements of these services were that they operated from retail shops selling clothes or fabrics and arranged the transfer of money to Country A (for a fee).

The largest remittance service among those investigated, 'Servicio Uno', was an incorporated company and had an annual turnover in excess of US$3.3mn. It accepted money from individual customers and also received funds from smaller remittance services locally and regionally. These smaller services channelled money through Servicio Uno because it had an extensive family-based delivery network in Country A.

The general method used by Servicio Uno was as follows:

Cash was received from customers and sub-agents; a proportion of these funds was deposited in a bank, and some was kept on hand.

Funds were transferred to Country A in two ways: either by telegraphic transfer purchased with cash or cheque; or by sending money to a trading company, 'Trans-Expedici�n SA', in Country B. This second company did business in Country A and had associates there that owed it money. Once Trans-Expedici�n received the money in Country B from Servicio Uno, it advised its debtors in Country A to pay a specified amount direct to another remittance business, Remesas-X, in Country A.

Twice weekly, Servicio Uno faxed a list of required deliveries to a company it owned and operated in Country A, including details of the sender, the recipient and their address, and the amount and type of currency or gold bars to be delivered. A fee of 5-10% was charged by Servicio Uno.

There was also evidence of substantial amounts of money flowing from Country A back to Servicio Uno. A fax was sent from Country A to Servicio Uno instructing it to provide a specific amount of money to an individual in Servicio Unos country or to pay the funds into a particular bank account there. No funds were actually transferred from Country A. Instead, a method was used whereby the remittance services at either end of the operation paid off each others liability with their own assets.

Results

Investigations revealed that several legitimate businesses in Servicio Uno's country had also repatriated funds to Country A using this method. They also revealed that a previously convicted money launderer had on at least one occasion transferred US$60,000 to Country A through Servicio Uno. Additionally, one sub-agent of Servicio Uno transferred funds on behalf of two active drug traffickers.

Lessons

This is a classic example of an alternative remittance system. The difficulties that an investigative agency might have if it were to detect part of the scheme would be the ability to determine the links to and from the third country.

The process would be further complicated by the high volume of legitimate business using this channel to move funds, and by the indirect settlement methods sometimes employed.

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